Blog

<p>At Atlantic Commercial Lending, we understand that commercial real estate (CRE) projects are complex undertakings that require a high level of expertise and experience. One of the critical aspects of any CRE project is understanding and managing construction development fees. These fees can significantly impact the overall cost and success of a project. Therefore, partnering with an experienced developer is essential to navigate these complexities effectively.</p><h2>What Are Construction Development Fees?</h2><p>Construction development fees encompass various costs associated with the planning, design, and construction of a commercial real estate project. These fees typically include:</p><p><strong>Architectural and Engineering Fees</strong>: Costs for designing the project and <strong>creating detailed plans.</strong><br><strong>Permit and Inspection Fees</strong>: Fees paid to local government agencies for permits and inspections required throughout the construction process.<br><strong>Legal and Professional Fees</strong>: Expenses for legal services, project management, and other professional consultations.<br><strong>Construction Management Fees:</strong> Charges for managing the construction process, including overseeing contractors and ensuring the project stays on schedule and within budget.<br><strong>Financing Fees:</strong> Costs associated with securing financing for the project, such as loan origination fees and interest during construction.<br><strong>Contingency Fees:</strong> A budgeted amount set aside to cover unexpected costs that may arise during the construction process.</p><figure id="figure-embbmnxbdplxl8vnw2" class=""><img id="embbmnxbdplxl8vnw2" src="https://images.unsplash.com/photo-1512207736890-6ffed8a84e8d?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHw5fHxjb25zdHJ1Y3Rpb24lMjBmZWVzfGVufDB8fHx8MTcxODc2NTk2Nnww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" alt="construction fees" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9;" data-mce-src="https://images.unsplash.com/photo-1512207736890-6ffed8a84e8d?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHw5fHxjb25zdHJ1Y3Rpb24lMjBmZWVzfGVufDB8fHx8MTcxODc2NTk2Nnww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" data-mce-style="aspect-ratio: 16/9;"></figure><h2>Why Developer Experience Matters</h2><p>An experienced developer brings invaluable expertise to a commercial real estate project, ensuring that construction development fees are managed effectively. Here’s why developer experience is a must:</p><p><strong>Accurate Cost Estimation:</strong> Experienced developers have a deep understanding of the costs involved in CRE projects. They can provide accurate estimates for development fees, helping to prevent budget overruns.<br><strong>Efficient Project Management</strong>: Seasoned developers know how to manage construction timelines and coordinate various aspects of the project. Their experience helps in avoiding delays and ensuring that the project progresses smoothly.<br><strong>Regulatory Knowledge</strong>: Navigating the maze of permits, inspections, and regulations requires extensive knowledge of local laws and codes. Experienced developers are familiar with these requirements and can expedite the approval process.<br><strong>Risk Mitigation: </strong>Construction projects inherently come with risks, such as unforeseen site conditions or changes in market conditions. Experienced developers are adept at identifying potential risks early and implementing strategies to mitigate them.<br><strong>Quality Control: </strong>Ensuring high-quality construction is crucial for the long-term success of a commercial property. Experienced developers have established relationships with reliable contractors and suppliers, ensuring that the project meets high standards of quality.<br><strong>Maximizing Value: </strong>A developer with a proven track record can identify opportunities to enhance the value of the project, whether through innovative design, efficient use of materials, or strategic project phasing.</p><h3>Budgeting for Development Fees</h3><p>One of the first steps in any project is creating a budget. Experienced developers know how to include development fees in their budgets. They use their knowledge to estimate costs accurately. This helps avoid surprises later on.</p><figure id="figure-xy5seg1rmslxl8vpzb"><img id="xy5seg1rmslxl8vpzb" src="https://images.unsplash.com/photo-1518976024611-28bf4b48222e?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHw2fHxidWRnZXQlMjBwbGFubmluZ3xlbnwwfHx8fDE3MTg2ODMzMDB8MA&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" alt="budget planning" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9;" data-mce-src="https://images.unsplash.com/photo-1518976024611-28bf4b48222e?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHw2fHxidWRnZXQlMjBwbGFubmluZ3xlbnwwfHx8fDE3MTg2ODMzMDB8MA&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" data-mce-style="aspect-ratio: 16/9;"></figure><h2>Negotiating Development Fees</h2><p>Negotiation is a key skill for developers. Experienced developers know when and how to negotiate fees. They understand the local regulations and can make a case for lower fees if needed. This can save a project significant money.</p><h3>Case Studies of Successful Negotiations</h3><p>Many successful projects highlight the importance of experience. For example, a developer may negotiate lower fees by agreeing to provide additional public benefits. These could include parks or community centers. This creates a win-win situation for both the developer and the community.</p><figure id="figure-aabwlmexzlxl8vtpd"><img id="aabwlmexzlxl8vtpd" src="https://images.unsplash.com/photo-1581094271901-8022df4466f9?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyN3x8bmVnb3RpYXRpb24lMjBzdWNjZXNzfGVufDB8fHx8MTcxODc2NTk3NHww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" alt="negotiation success" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9;" data-mce-src="https://images.unsplash.com/photo-1581094271901-8022df4466f9?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyN3x8bmVnb3RpYXRpb24lMjBzdWNjZXNzfGVufDB8fHx8MTcxODc2NTk3NHww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" data-mce-style="aspect-ratio: 16/9;"></figure><h3><strong>Conclusion</strong></h3><p>Construction development fees are a significant component of any commercial real estate project. Managing these fees effectively requires the expertise and experience that only seasoned developers can provide. At Atlantic Commercial Lending, we emphasize the importance of partnering with experienced developers to ensure the success of your CRE projects. Their knowledge, skills, and proven track record can make a substantial difference in the outcome, helping you achieve your investment goals while maintaining control over costs and timelines.</p><p>For more information on how we can assist you with your commercial real estate financing needs, contact us today. Let’s build a successful future together.</p>

The Importance of Developer Experience in Commercial Real Estate: Understanding Construction Development Fees

<h2>Understanding Soft Costs in Commercial Real Estate</h2>

<p>When investing in commercial real estate, it's crucial to understand all associated costs. One significant category is soft costs. These are expenses not directly tied to the physical construction of the building. Instead, they cover services and fees that support the project. This post will focus on two key components: architecture and engineering.</p>

<h3>What Are Soft Costs?</h3>

<p>Soft costs include various non-construction expenses. They often involve professional services, permits, and administrative costs. These costs are essential for the project's success, even though they don't contribute to the physical structure.</p>

<figure id="figure-0jbc30yf4lxl80ifc"><img id="0jbc30yf4lxl80ifc" src="https://images.unsplash.com/photo-1518799937599-77763326c394?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxMHx8YXJjaGl0ZWN0dXJlJTIwYmx1ZXByaW50c3xlbnwwfHx8fDE3MTg3NjQ1MTN8MA&ixlib=rb-4.0.3&q=80&w=1080" alt="architecture blueprints" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

<h3>Role of Architects work includes creating blueprints, securing permits, and overseeing the construction process. The fees for these services are considered soft costs.</p>

<p>Architectural services can be broken down into several stages:</p>
<ul>
  <li><strong>Concept Design:</strong> Initial sketches and ideas for the project.</li>
  <li><strong>Design Development:</strong> Detailed plans and specifications.</li>
  <li><strong>Construction Documents:</strong> Blueprints and technical drawings.</li>
  <li><strong>Construction Administration:</strong> Oversight during the building process.</li>
</ul>

<image:engineering plans/>

<h3>Importance of Engineering</h3>

<p>Engineering services are another critical soft cost. Engineers ensure the building's structural integrity and compliance with safety standards. They work on various aspects, including electrical, plumbing, and mechanical systems.</p>

<p>Engineering services often include:</p>
<ol>
  <li><strong>Structural Engineering:</strong> Ensuring the building can withstand stresses and forces.</li>
  <li><strong>Mechanical Engineering:</strong> Designing heating, ventilation, and air conditioning (HVAC) systems.</li>
  <li><strong>Electrical Engineering:</strong> Planning electrical systems and ensuring they meet codes.</li>
  <li><strong>Civil Engineering:</strong> Managing site development and infrastructure.</li>
</ol>

<figure id="figure-x5clioo9rhlxl80mz9"><img id="x5clioo9rhlxl80mz9" src="https://images.unsplash.com/photo-1615224064263-c334c7bf1b08?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyMXx8Y29uc3RydWN0aW9uJTIwc2l0ZXxlbnwwfHx8fDE3MTg3NDg0MjV8MA&ixlib=rb-4.0.3&q=80&w=1080" alt="construction site" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

<h3 significantly impact the overall cost of a project. Ignoring them can lead to financial shortfalls and delays.</p>

<p>Properly accounting for soft costs ensures a smoother project flow. It helps in securing financing and meeting deadlines. Investors and developers must factor in these costs from the beginning.</p>

<h3>Conclusion</h3>

<p>Soft costs, including architecture and engineering, are essential for any commercial real estate project. They ensure the building is designed well and meets all regulatory standards. By understanding and planning for these costs, you can set your project up for success.</p>

<p>For more information on managing soft costs, feel free to contact our expert team. We are here to help you navigate the complexities of commercial real estate investments.</p>

Understanding Soft Costs in Commercial Real Estate: Architecture and Engineering

<h2>Understanding ESG in Commercial Real Estate</h2><p>Environmental, Social, and Governance (ESG) factors are becoming important in commercial real estate. Investors, tenants, and regulators are paying more attention to these factors. They want to ensure that properties meet certain standards.</p><p>ESG can affect property values and investment returns. It is crucial for stakeholders to understand how ESG impacts commercial real estate. This post will explain the basics of ESG and its importance in the industry.</p><figure id="figure-wd44wdgfxglxkzphjy"><img id="wd44wdgfxglxkzphjy" src="https://images.unsplash.com/photo-1569227997603-33b9f12af927?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHw0fHxzdXN0YWluYWJsZSUyMGJ1aWxkaW5nfGVufDB8fHx8MTcxODc1MDU2Mnww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" alt="sustainable building" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9;" data-mce-src="https://images.unsplash.com/photo-1569227997603-33b9f12af927?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHw0fHxzdXN0YWluYWJsZSUyMGJ1aWxkaW5nfGVufDB8fHx8MTcxODc1MDU2Mnww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" data-mce-style="aspect-ratio: 16/9;"></figure><p>Green certifications, such as LEED, are a way to show that a building meets high environmental standards. These certifications can increase a property's value and attract more tenants.</p><h3>Social Factors</h3><p>Social factors relate to the impact of a property on people. This includes the health and safety of tenants and workers. It also includes the building's impact on the local community. Properties that provide a safe and healthy environment are more desirable.</p><figure id="figure-2ht4itggsolxkzpikb"><img id="2ht4itggsolxkzpikb" src="https://images.unsplash.com/photo-1553073520-80b5ad5ec870?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHw4fHxjb21tdW5pdHklMjBlbmdhZ2VtZW50fGVufDB8fHx8MTcxODc1MDM5Mnww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" alt="community engagement" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9;" data-mce-src="https://images.unsplash.com/photo-1553073520-80b5ad5ec870?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHw4fHxjb21tdW5pdHklMjBlbmdhZ2VtZW50fGVufDB8fHx8MTcxODc1MDM5Mnww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" data-mce-style="aspect-ratio: 16/9;"></figure><p>a diverse group of tenants can attract more businesses. They can also foster a positive community atmosphere.</p><h3>Governance Factors</h3><p>Governance factors involve how a property is managed. This includes transparency, ethical practices, and compliance with laws. Good governance can reduce risks and build trust with investors and tenants.</p><p>Strong governance practices can lead to better decision-making. They can also help avoid legal issues and scandals.</p><figure id="figure-w5hycv9llclxkzpjnz"><img id="w5hycv9llclxkzpjnz" src="https://images.unsplash.com/photo-1577415124269-fc1140a69e91?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyOHx8YnVzaW5lc3MlMjBtZWV0aW5nfGVufDB8fHx8MTcxODY3NjcxNXww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" alt="business meeting" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9;" data-mce-src="https://images.unsplash.com/photo-1577415124269-fc1140a69e91?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyOHx8YnVzaW5lc3MlMjBtZWV0aW5nfGVufDB8fHx8MTcxODY3NjcxNXww&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" data-mce-style="aspect-ratio: 16/9;"></figure><h3>The Benefits of ESG</h3><p>There are many benefits to focusing on ESG in commercial real estate. These include:</p><ul><li>Higher property values</li><li>Attracting more tenants</li><li>Lower operating costs</li><li>Reduced risks</li></ul><p>Investors and tenants are increasingly looking for properties that meet ESG standards. By focusing on ESG, property owners can stay competitive in the market.</p><h3>Implementing ESG Practices</h3><p>Implementing ESG practices can seem challenging, but it is possible. Property owners can start by conducting an ESG assessment. This will help identify areas for improvement.</p><p>Next, they can set specific goals and create a plan to achieve them. This might include upgrading building systems, improving waste management, or enhancing tenant safety.</p><p>Regular monitoring and reporting are also important. This helps ensure that ESG goals are being met and allows for adjustments as needed.</p><h3>Conclusion</h3><p>ESG factors are becoming essential in commercial real estate. By understanding and implementing these practices, property owners can improve their properties' value and appeal. They can also contribute to a more sustainable and equitable world.</p>

Understanding ESG in Commercial Real Estate

man standing near road next to people during daytime

<p>Credit Tenant Build-to-Suit (BTS) construction and perm loans are specialized financing options. They cater to projects where a creditworthy tenant leases the entire property. Understanding these loans can help you navigate the complexities of commercial real estate development.</p>

<h2>What is a Build-to-Suit Construction Loan?</h2>
<p>A Build-to-Suit construction loan is designed for projects where a developer constructs a property to the specifications of a tenant. The tenant usually commits to a long-term lease before construction begins. This commitment reduces the risk for lenders.</p>

<p>Developers benefit from these loans because they provide the necessary funds to complete the project. The tenant benefits by getting a property tailored to their needs.</p>

<figure id="figure-mw41ufs43lxkym0i1"><img id="mw41ufs43lxkym0i1" src="https://images.unsplash.com/photo-1565008447742-97f6f38c985c?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxOHx8Y29uc3RydWN0aW9uJTIwc2l0ZXxlbnwwfHx8fDE3MTg3NDg0MjV8MA&ixlib=rb-4.0.3&q=80&w=1080" alt="construction site" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

<h lease involves a tenant with a strong credit rating. These tenants are often large corporations or government entities. Their financial strength makes them less likely to default on the lease.</p>

<p>Because of the reduced risk, lenders are more willing to offer favorable terms. This can include lower interest rates and longer loan terms.</p>

<h2>Perm Loans Explained</h2>
<p>Perm loans, or permanent loans, are long-term financing options that replace construction loans once the project is complete. These loans are typically amortized over a long period, such as 15 to 30 years.</p>

<p>Developers use perm loans to pay off the construction loan and secure stable, long-term financing. This transition from construction loan to perm loan is crucial for maintaining financial stability.</p>

<figure id="figure-v12dgy98alxkym273"><img id="v12dgy98alxkym273" src="https://images.unsplash.com/photo-1579621970588-a35d0e7ab9b6?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyfHxmaW5hbmNpYWwlMjBwbGFubmluZ3xlbnwwfHx8fDE3MTg3MzEyMjd8MA&ixlib=rb-4.0.3&q=80&w=1080" alt="financial planning" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

<h2>Reduced Risk</h3>
<p>The primary benefit is the reduced risk for lenders. A creditworthy tenant's long-term lease commitment lowers the likelihood of default.</p>

<h3>Favorable Loan Terms</h3>
<p>Lenders offer better terms due to the reduced risk. This can mean lower interest rates, longer terms, and higher loan amounts.</p>

<h3>Custom-Built Properties</h3>
<p>Tenants get properties that meet their specific needs. This can improve their operational efficiency and satisfaction.</p>

<figure id="figure-awvtb27v3lxkym3sw"><img id="awvtb27v3lxkym3sw" src="https://images.unsplash.com/photo-1666054186508-e85232973c12?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxOHx8Y3VzdG9tJTIwYnVpbGRpbmd8ZW58MHx8fHwxNzE4NzQ4NzI0fDA&ixlib=rb-4.0.3&q=80&w=1080" alt="custom building" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

  <li>Work with the tenant to design a property that meets their needs.</li>
  <li>Secure a Build-to-Suit construction loan to fund the project.</li>
  <li>Complete the construction according to the agreed specifications.</li>
  <li>Transition to a perm loan once the construction is complete.</li>
</ol>

<p>Understanding these steps can help you navigate the process more effectively. Each step is crucial for securing the necessary financing and completing the project successfully.</p>

<p>In conclusion, Credit Tenant Build-to-Suit construction and perm loans offer significant benefits for developers and tenants. By understanding these financing options, you can make informed decisions and achieve your commercial real estate goals.</p>

Understanding Credit Tenant Build-to-Suit Construction and Perm Loans

low angle photography of cranes on top of building

<h2>Understanding Combination Construction and Permanent Fixed Rate Non-Recourse Loans</h2>

<p>Combination construction and permanent fixed rate non-recourse loans offer a unique financing solution for commercial real estate projects. Let's break down what these loans are and how they can benefit you.</p>

<h3>What Are Combination Construction and Permanent Loans?</h3>

<p>These loans combine two phases of financing into one package. First, they cover the construction phase, providing the funds needed to build or renovate a property. Once the construction is complete, the loan transitions into a permanent fixed rate loan. This means you don't need to secure separate financing for the construction and permanent phases, simplifying the process.</p>

<image:commercial construction/>

<h3>What Is a Non-Recourse Loan?</h3>

<p>A non-recourse loan is a type of financing where the lender's only security is the property itself. If the borrower defaults, the lender can seize the property but cannot pursue the borrower's other assets. This reduces the risk for the borrower, making it an attractive option for many investors.</p>

<h3>Benefits of Combination Construction and Permanent Fixed Rate Non-Recourse Loans</h3>

<p>There are several benefits to choosing this type of loan:</p>

<ol>
  <li><strong>Simplified Process</strong>: By combining construction and permanent financing, you reduce the need for multiple loan applications and approvals.</li>
  <li><strong>Cost Savings</strong>: You can save on closing costs and fees by consolidating the financing into one package.</li>
  <li><strong>Fixed Rates</strong>: The permanent phase of the loan comes with a fixed interest rate, providing stability and predictability in your financial planning.</li>
  <li><strong>Limited Liability</strong>: The non-recourse nature of the loan limits the lender's claim to the property itself, protecting your other assets.</li>
</ol>

<figure id="figure-tcdyrtvh3lxkyfgha"><img id="tcdyrtvh3lxkyfgha" src="https://images.unsplash.com/photo-1531403009284-440f080d1e12?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyNHx8ZmluYW5jaWFsJTIwcGxhbm5pbmd8ZW58MHx8fHwxNzE4NzMxMjI3fDA&ixlib=rb-4.0.3&q=80&w=1080" alt="financial planning" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

<h3>Who Should Consider This Type of Loan?</h3>

<p>These loans are ideal for developers and investors looking to finance large commercial projects. They provide a streamlined, cost-effective solution for those who want to minimize risk and secure stable, long-term financing.</p>

<p>In conclusion, combination construction and permanent fixed rate non-recourse loans offer a practical and secure way to finance commercial real estate projects. By understanding their benefits and how they work, you can make informed decisions that align with your investment goals.</p>

<figure id="figure-sesejnlsfmlxkyfjzp"><img id="sesejnlsfmlxkyfjzp" src="https://images.unsplash.com/photo-1507679799987-c73779587ccf?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxM3x8cmVhbCUyMGVzdGF0ZSUyMGludmVzdG1lbnR8ZW58MHx8fHwxNzE4NzQ4NDE5fDA&ixlib=rb-4.0.3&q=80&w=1080" alt="real estate investment" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure><p>Combination Construction and Permanent Fixed Rate Non-Recourse Loans offer a unique solution for developers and investors. These loans provide the funding needed for both the construction phase and the permanent financing of a project. This comprehensive guide will help you understand the benefits and process of these loans.</p>

<h2>What is a Combination Construction and Permanent Loan?</h2>
<p>A Combination Construction and Permanent Loan is a type of financing that covers both the construction and long-term phases of a project. The borrower secures a single loan that transitions from construction to permanent financing. This means there is no need for separate loans, reducing the hassle and cost.</p>

<p>These loans are also non-recourse, which means the lender can only claim the collateral in case of default. The borrower's other assets remain protected. This is particularly beneficial for developers looking to minimize risk.</p>

<figure id="figure-7zlaxut4fulxkyfoyp"><img id="7zlaxut4fulxkyfoyp" src="https://images.unsplash.com/photo-1599707254554-027aeb4deacd?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxNXx8Y29uc3RydWN0aW9uJTIwc2l0ZXxlbnwwfHx8fDE3MTg3NDg0MjV8MA&ixlib=rb-4.0.3&q=80&w=1080" alt="construction site" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

 to choosing a Combination Construction and Permanent Fixed Rate Non-Recourse Loan:</p>

<ul>
  <li><strong>Single Closing:</strong> Only one closing is needed, saving time and money.</li>
  <li><strong>Fixed Rate:</strong> The interest rate is fixed, providing stability and predictability.</li>
  <li><strong>Non-Recourse:</strong> Limits the lender's claim to the collateral only.</li>
</ul>

<p>These benefits make combination loans a popular choice for many developers and investors.</p>

<h3>Single Closing</h3>
<p>With a single closing, borrowers can avoid the costs and complexities of multiple closings. This simplifies the process and reduces legal and administrative fees. It also means less paperwork and a quicker path to securing the necessary funds.</p>

<figure id="figure-ds6dycrvnolxkyfrgd"><img id="ds6dycrvnolxkyfrgd" src="https://images.unsplash.com/photo-1486406146926-c627a92ad1ab?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxOXx8ZmluYW5jaWFsJTIwYWdyZWVtZW50fGVufDB8fHx8MTcxODczMTM0MXww&ixlib=rb-4.0.3&q=80&w=1080" alt="financial agreement" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

 stability. Borrowers know what their payments will be throughout the life of the loan. This predictability makes it easier to plan and budget for the project's financial needs.</p>

<h2>How to Apply for a Combination Loan</h2>
<p>Applying for a Combination Construction and Permanent Loan involves several steps. Here is a general outline of the process:</p>

<ol>
  <li><strong>Pre-Qualification:</strong> Assess your financial situation and project details.</li>
  <li><strong>Application:</strong> Submit an application with the required documentation.</li>
  <li><strong>Approval:</strong> The lender reviews your application and approves the loan.</li>
  <li><strong>Closing:</strong> Sign the loan agreement and complete the closing process.</li>
</ol>

<p>Each lender may have specific requirements, so it is essential to work closely with your broker to ensure a smooth process.</p>

<figure id="figure-yvsgye0piulxkyfu93"><img id="yvsgye0piulxkyfu93" src="https://images.unsplash.com/photo-1583241801076-37b30763b0ff?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyNnx8bG9hbiUyMGFwcGxpY2F0aW9ufGVufDB8fHx8MTcxODc0ODQzMnww&ixlib=rb-4.0.3&q=80&w=1080" alt="loan application" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

 closing, fixed rates, and non-recourse terms, they are an attractive choice for developers and investors. Understanding the application process and working with a knowledgeable broker can help you take full advantage of these loans.</p>

Combination Construction and Permanent Fixed Rate Non-Recourse Loans: A Comprehensive Guide

<h2>Understanding Permanent Fixed-Rate and Floating-Rate Loans</h2>

<p>When it comes to commercial mortgages, borrowers often face a choice between permanent fixed-rate and floating-rate loans. Understanding the differences between these two options can help you make a more informed decision.</p>

<h3>What is a Fixed-Rate Loan?</h3>

<p>A fixed-rate loan has an interest rate that remains the same for the entire term of the loan. This means your monthly payments will be consistent, making it easier to budget. Fixed-rate loans are ideal for those who prefer stability and predictability in their financial planning.</p>

<figure id="figure-pn6vruxnqflxky8t2v"><img id="pn6vruxnqflxky8t2v" src="https://images.unsplash.com/photo-1627719172031-ab42dc849bc3?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyN3x8Zml4ZWQtcmF0ZXxlbnwwfHx8fDE3MTg3NDgxMDR8MA&ixlib=rb-4.0.3&q=80&w=1080" alt="fixed-rate" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

 your rate will stay the same. However, if market rates decrease, you will not benefit from the lower rates.</p>

<h3>What is a Floating-Rate Loan?</h3>

<p>A floating-rate loan, also known as a variable-rate loan, has an interest rate that can change over time. The rate is typically tied to a benchmark index, such as the LIBOR or the prime rate. As these indices fluctuate, so does your interest rate.</p>

<p>Floating-rate loans can be advantageous if you expect interest rates to decrease in the future. These loans often start with a lower rate compared to fixed-rate loans, but they come with the risk of increasing rates, which can lead to higher monthly payments.</p>

<figure id="figure-lkpad4ivvqlxky8uxt"><img id="lkpad4ivvqlxky8uxt" src="https://images.unsplash.com/photo-1476201732846-9bf5614717dd?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwyM3x8ZmxvYXRpbmctcmF0ZXxlbnwwfHx8fDE3MTg3NDgxMDZ8MA&ixlib=rb-4.0.3&q=80&w=1080" alt="floating-rate" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

<h3> financial planning. You also have the peace of mind that comes with knowing your interest rate will not increase.</p>

<ul>
  <li><b>Pros:</b> Payment stability, protection from rising rates</li>
  <li><b>Cons:</b> Higher initial rates, no benefit from decreasing rates</li>
</ul>

<h3>Pros and Cons of Floating-Rate Loans</h3>

<p>Floating-rate loans can offer lower initial rates, which might be appealing if you expect to sell or refinance before rates rise. However, the risk of increasing rates can make these loans less predictable and harder to budget for.</p>

<ul>
  <li><b>Pros:</b> Lower initial rates, potential benefit from decreasing rates</li>
  <li><b>Cons:</b> Rate volatility, potential for higher payments</li>
</ul>

<figure id="figure-tv6uwpnwpxlxky8x5u"><img id="tv6uwpnwpxlxky8x5u" src="https://images.unsplash.com/photo-1689872330350-87e38c591b4f?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHw0fHxsb2FuLW9wdGlvbnN8ZW58MHx8fHwxNzE4NzQ4MTA5fDA&ixlib=rb-4.0.3&q=80&w=1080" alt="loan-options" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9"></figure>

 fixed-rate loan may be the better option. On the other hand, if you are comfortable with some level of risk and are looking for potentially lower initial rates, a floating-rate loan might be more suitable.</p>

<p>Consider your long-term financial goals and consult with a mortgage broker to determine which type of loan best meets your needs. Understanding the nuances of each option will help you make a more informed decision and secure the best financing for your commercial property.</p>

Atlantic Commercial Lending NMLS#2429887

Blog

The Importance of Developer Experience in Commercial Real...

Understanding Soft Costs in Commercial Real Estate: Archi...

Understanding ESG in Commercial Real Estate

Understanding Credit Tenant Build-to-Suit Construction an...

Combination Construction and Permanent Fixed Rate Non-Rec...

Understanding Permanent Fixed-Rate and Floating-Rate Loans